Eph receptors (Eph) are the largest family of receptor tyrosine kinases. Their ligands, the ephrin proteins, are membrane-bound peptides indicating that the Eph-ephrin system regulates cell-cell interactions. Eph-ephrin binding controls development and function of many tissues including the vascular and nervous systems. In the developing CNS, Eph-ephrin interactions regulate cell migration, axon guidance and synaptogenesis while in the adult brain they regulate memory-related functions, including synaptic structure and long-term potentiation. Binding of Eph receptors to ephrins on the surface of opposing cells or cellular processes triggers bi-directional signaling in both the receptor and the ligand expressing cells. This signaling can lead to repulsion and separation of the interacting cells or to increased adhesion and synapse formation. The Eph-ephrin systems control these events by signaling to the actin cytoskeleton, by triggering endocytosis of the membrane-bound Eph-ephrin complexes and by promoting proteolysis of their components. Recent reports show that EphB2-ephrinB2 binding regulates function of excitatory synapses, including activity of NMDA receptor, thus modulating synaptic plasticity and probably memory function. In addition, this binding initiates signaling cascades that involve Src kinases and phosphorylation of both EphB and ephrinB. This proposal is based on our observation that PS1, a protein involved in Alzheimer's disease (AD), forms complexes with both EphB2 and ephrinB2. Binding of EphB2 to ephrinB2 stimulates the PS1/gammasecretase cleavage of both proteins. Furthermore, the PS 1/gamma-secretase.system regulates propagation of downstream signaling cascades including Src activity and phosphorylation of ephrinB2. Here we propose to elucidate the mechanism by which PS1 regulates signaling events triggered by the EphB2/ephrinB2 interaction. We will also examine the effects of FAD-linked PS1 mutations on these signaling events.